First Substitute H.B. 315

Representative James A. Dunnigan proposes the following substitute bill:

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OFFICE OF INSPECTOR GENERAL OF MEDICAID

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SERVICES AMENDMENTS

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2013 GENERAL SESSION

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STATE OF UTAH

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Chief Sponsor: James A. Dunnigan

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Senate Sponsor:
Stephen H. Urquhart

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LONG TITLE
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General Description:
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This bill amends budgeting related to the Office of Inspector General of Medicaid
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Services.
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Highlighted Provisions:
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This bill:
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. amends the duties and powers of the inspector general;
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. amends the period of time in which the inspector general can review claims for
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waste and abuse;
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. amends the manner in which the inspector general accesses records;
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. establishes the application of Medicaid policy when there is inconsistency between
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the state Medicaid plan, administrative rules, and department information bulletins;
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. requires the Office of Inspector General of Medicaid Services to adopt
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administrative rules in consultation with health care providers to develop audit and
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investigation procedures;
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. requires the Office of Inspector General of Medicaid Services to educate health care
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providers about the audit and investigation procedures; and
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. amends the reporting requirements to the Legislature.

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Money Appropriated in this Bill:
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None
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Other Special Clauses:
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None
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Utah Code Sections Affected:
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AMENDS:
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63J-4a-202, as enacted by Laws of Utah 2011, Chapter 151
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63J-4a-204, as enacted by Laws of Utah 2011, Chapter 151
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63J-4a-301, as enacted by Laws of Utah 2011, Chapter 151
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63J-4a-302, as enacted by Laws of Utah 2011, Chapter 151
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63J-4a-501, as enacted by Laws of Utah 2011, Chapter 151
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63J-4a-502, as enacted by Laws of Utah 2011, Chapter 151
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63J-4a-602, as enacted by Laws of Utah 2011, Chapter 151
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ENACTS:
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63J-4a-305, Utah Code Annotated 1953
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Be it enacted by the Legislature of the state of Utah:
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Section 1.
Section
63J-4a-202
is amended to read:
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63J-4a-202. Duties and powers of inspector general and office.
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(1) The inspector general shall:
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(a) administer, direct, and manage the office;
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(b) inspect and monitor the following in relation to the state Medicaid program:
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(i) the use and expenditure of federal and state funds;
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(ii) the provision of health benefits and other services;
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(iii) implementation of, and compliance with, state and federal requirements; and
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(iv) records and recordkeeping procedures;
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(c) receive reports of potential fraud, waste, or abuse in the state Medicaid program;
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(d) investigate and identify potential or actual fraud, waste, or abuse in the state
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Medicaid program;
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(e) consult with the Centers for Medicaid and Medicare Services and other states to
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determine and implement best practices for:

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(i) educating and communicating with health care professionals and providers about
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program and audit policies and procedures;
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(ii) discovering and eliminating fraud, waste, and abuse of Medicaid funds; and
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(iii) differentiating between honest mistakes and intentional errors, or fraud, waste, and
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abuse, for the purpose of entering into settlement negotiations with the provider or health care
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professional;
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(f) obtain, develop, and utilize computer algorithms to identify fraud, waste, or abuse
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in the state Medicaid program;
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(g) work closely with the fraud unit to identify and recover improperly or fraudulently
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expended Medicaid funds;
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(h) audit, inspect, and evaluate the functioning of the division [to] for the purpose of
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making recommendations to the Legislature and the department to ensure that the state
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Medicaid program is managed:
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(i) in the most efficient and cost-effective manner possible; and
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(ii) in a manner that promotes adequate provider and health care professional
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participation and the provision of appropriate health benefits and services;
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[(i) regularly advise the department and the division of an action that should be taken
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to ensure that the state Medicaid program is managed in the most efficient and cost-effective
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manner possible;]
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[(j)] (i) refer potential criminal conduct, relating to Medicaid funds or the state
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Medicaid program, to the fraud unit;
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(j) refer potential criminal conduct, including relevant data from the controlled
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substance database, relating to Medicaid fraud, to law enforcement in accordance with Title 58,
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Chapter 37f, Controlled Substance Database Act;
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(k) determine ways to:
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(i) identify, prevent, and reduce fraud, waste, and abuse in the state Medicaid program;
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and
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(ii) [recoup costs,] balance efforts to reduce costs, and avoid or minimize increased
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costs of the state Medicaid program with the need to encourage robust health care professional
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and provider participation in the state Medicaid program;
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(l) [seek recovery of] recover improperly paid Medicaid funds;

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(m) track recovery of Medicaid funds by the state;
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(n) in accordance with Section
63J-4a-501
:
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(i) report on the actions and findings of the inspector general; and
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(ii) make recommendations to the Legislature and the governor;
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(o) provide training to:
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(i) agencies and employees on identifying potential fraud, waste, or abuse of Medicaid
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funds; and
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(ii) health care professionals and providers on program and audit policies, procedures,
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and compliance; and
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(p) develop and implement principles and standards for the fulfillment of the duties of
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the inspector general, based on principles and standards used by:
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(i) the Federal Offices of Inspector General;
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(ii) the Association of Inspectors General; and
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(iii) the United States Government Accountability Office.
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(2) (a) The office may, in fulfilling the duties under Subsection (1), conduct a
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performance or financial audit of:
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[(a)] (i) a state executive branch entity or a local government entity, including an entity
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described in Subsection
63J-4a-301
(3), that:
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[(i)] (A) manages or oversees a state Medicaid program; or
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[(ii)] (B) manages or oversees the use or expenditure of state or federal Medicaid
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funds; or
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[(b)] (ii) Medicaid funds received by a person by a grant from, or under contract with, a
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state executive branch entity or a local government entity.
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(b) (i) The office may not, in fulfilling the duties under Subsection (1), amend the
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Medicaid state program or change the policies and procedures of the Medicaid state program.
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(ii) The office may identify conflicts between the state Medicaid plan, department
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administrative rules, Medicaid provider manuals, and Medicaid information bulletins and
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recommend that the department reconcile inconsistencies. If the department does not reconcile
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the inconsistencies, the office shall report the inconsistencies to the Legislature's
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Administrative Rules Review Committee created in Section
63G-3-501
.
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(3) (a) The office shall, in fulfilling the duties under this section to investigate,

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discover, and recover fraud, waste, and abuse in the Medicaid program, apply the state
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Medicaid plan, department administrative rules, Medicaid provider manuals, and Medicaid
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information bulletins in effect at the time the medical services were provided.
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(b) If there is a conflict between the Medicaid state plan, administrative rules,
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Medicaid provider manuals, or a Medicaid information bulletin issued by the department, a
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health care provider may rely on the policy interpretation included in a current Medicaid
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provider manual or current Medicaid information bulletin that is available to the public.
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[(3)] (4) The inspector general, or a designee of the inspector general within the office,
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may take a sworn statement or administer an oath.
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Section 2.
Section
63J-4a-204
is amended to read:
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63J-4a-204. Selection and review of claims.
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(1) (a) On an annual basis, the office shall select and review a representative sample of
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claims submitted for reimbursement under the state Medicaid program to determine whether
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fraud, waste, or abuse occurred.
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(b) The office shall limit its review for waste and abuse under Subsection (1)(a) to 36
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months prior to the date of the inception of the investigation.
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(2) The office may directly contact the recipient of record for a Medicaid reimbursed
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service to determine whether the service for which reimbursement was claimed was actually
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provided to the recipient of record.
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(3) The office shall generate statistics from the sample described in Subsection (1) to
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determine the type of fraud, waste, or abuse that is most advantageous to focus on in future
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audits or investigations.
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Section 3.
Section
63J-4a-301
is amended to read:
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63J-4a-301. Access to records -- Retention of designation under Government
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Records Access and Management Act.
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(1) In order to fulfill the duties described in Section
63J-4a-202
, and in the manner
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provided in Subsection (4), the office shall have unrestricted access to all records of state
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executive branch entities, all local government entities, and all providers relating, directly or
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indirectly, to:
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(a) the state Medicaid program;
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(b) state or federal Medicaid funds;

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(c) the provision of Medicaid related services;
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(d) the regulation or management of any aspect of the state Medicaid program;
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(e) the use or expenditure of state or federal Medicaid funds;
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(f) suspected or proven fraud, waste, or abuse of state or federal Medicaid funds;
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(g) Medicaid program policies, practices, and procedures;
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(h) monitoring of Medicaid services or funds; or
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(i) a fatality review of a person who received Medicaid funded services.
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(2) The office shall have access to information in any database maintained by the state
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or a local government to verify identity, income, employment status, or other factors that affect
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eligibility for Medicaid services.
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(3) The records described in Subsections (1) and (2) include records held or maintained
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by the department, the division, the Department of Human Services, the Department of
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Workforce Services, a local health department, a local mental health authority, or a school
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district. The records described in Subsection (1) include records held or maintained by a
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provider. When conducting an audit of a provider, the office shall, to the extent possible, limit
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the records accessed to the scope of the audit.
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(4) A record, described in Subsection (1) or (2), that is accessed or copied by the
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office:
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(a) may be reviewed or copied by the office during normal business hours, unless
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otherwise requested by the provider or health care professional under Subsection (4)(b); [and]
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(b) unless there is a credible allegation of fraud, shall be accessed, reviewed, and
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copied in a manner, on a day, and at a time that is minimally disruptive to the health care
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professional's or provider's care of patients, as requested by the health care professional or
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provider;
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(c) may be submitted electronically;
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(d) may be submitted together with other records for multiple claims; and
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[(b)] (e) if it is a government record, shall retain the classification made by the entity
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responsible for the record, under Title 63G, Chapter 2, Government Records Access and
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Management Act.
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(5) Notwithstanding any provision of state law to the contrary, the office shall have the
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same access to all records, information, and databases [that] to which the department or the

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division have access [to].
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(6) The office shall comply with the requirements of federal law, including the Health
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Insurance Portability and Accountability Act of 1996 and 42 C.F.R., Part 2, relating to [the
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confidentiality of alcohol and drug abuse records, in] the office's:
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(a) access, review, retention, and use of records; and
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(b) use of information included in, or derived from, records.
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Section 4.
Section
63J-4a-302
is amended to read:
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63J-4a-302. Access to employees -- Cooperating with investigation or audit.
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(1) The office shall have access to interview the following persons if the inspector
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general determines that the interview may assist the inspector general in fulfilling the duties
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described in Section
63J-4a-202
:
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(a) a state executive branch official, executive director, director, or employee;
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(b) a local government official or employee;
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(c) a consultant or contractor of a person described in Subsection (1)(a) or (b); or
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(d) a provider or a health care professional or an employee of a provider or a health
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care professional.
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(2) A person described in Subsection (1) and each supervisor of the person shall fully
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cooperate with the office by:
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(a) providing the office or the inspector general's designee with access to interview the
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person;
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(b) completely and truthfully answering questions asked by the office or the inspector
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general's designee;
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(c) providing the records, described in Subsection
63J-4a-301
(1), in the manner
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described in Subsection
63J-4a-301
(4), requested by the office or the inspector general's
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designee; and
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(d) providing the office or the inspector general's designee with information relating to
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the office's investigation or audit.
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(3) A person described in Subsection (1)(a) or (b) and each supervisor of the person
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shall fully cooperate with the office by:
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(a) providing records requested by the office or the inspector general's designee in the
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manner described in Subsection
63J-4a-301
(4); and

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(b) providing the office or the inspector general's designee with information relating to
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the office's investigation or audit, including information that is classified as private, controlled,
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or protected under Title 63G, Chapter 2, Government Records Access and Management Act.
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Section 5.
Section
63J-4a-305
is enacted to read:
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63J-4a-305. Audit and investigation procedures.
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(1) (a) The office shall, in accordance with Section
63J-4a-602
, adopt administrative
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rules in consultation with providers and health care professionals subject to audit and
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investigation under this chapter to establish procedures for audits and investigations that are
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fair and consistent with the duties of the office under this chapter.
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(b) If the providers and health care professionals do not agree with the rules proposed
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or adopted by the office under Subsection (1)(a) or Section
63J-4a-602
, the providers or health
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care professionals may:
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(i) request a hearing for the proposed administrative rule or seek any other remedies
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under the provisions of Title 63G, Chapter 3, Utah Administrative Rulemaking Act; and
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(ii) request a review of the rule by the Legislature's Administrative Rules Review
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Committee created in Section
63G-3-501
.
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(2) The office shall notify and educate providers and health care professionals subject
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to audit and investigation under this chapter of the providers' and health care professionals'
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responsibilities and rights under the administrative rules adopted by the office under the
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provisions of this section and Section
63J-4a-602
.
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Section 6.
Section
63J-4a-501
is amended to read:
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63J-4a-501. Duty to report potential Medicaid fraud to the office or fraud unit.
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(1) [A] (a) Except as provided in Subsection (1)(b), a health care professional, a
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provider, or a state or local government official or employee who becomes aware of fraud,
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waste, or abuse shall report the fraud, waste, or abuse to the office or the fraud unit.
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(b) (i) If a person described in Subsection (1)(a) reasonably believes that the waste is a
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mistake and is not intentional or knowing, the person may first report the waste to the provider,
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health care professional, or compliance officer for the provider or health care professional.
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(ii) The person described in Subsection (1)(b) shall report the waste to the office or the
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fraud unit unless, within 30 days after the day on which the person reported the waste to the
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provider, health care professional, or compliance officer, the provider, health care professional,

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or compliance officer demonstrates to the person that the waste has been corrected.
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(2) A person who makes a report under Subsection (1) may request that the person's
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name not be released in connection with the investigation.
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(3) If a request is made under Subsection (2), the person's identity may not be released
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to any person or entity other than the office, the fraud unit, or law enforcement, unless a court
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of competent jurisdiction orders that the person's identity be released.
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Section 7.
Section
63J-4a-502
is amended to read:
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63J-4a-502. Report and recommendations to governor and Executive
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Appropriations Committee.
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(1) The inspector general shall, on an annual basis, prepare a written report on the
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activities of the office for the preceding fiscal year.
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(2) The report shall include:
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(a) non-identifying information, including statistical information, on:
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(i) the items described in Subsection
63J-4a-202
(1)(b) and Section
63J-4a-204
;
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(ii) action taken by the office and the result of that action;
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(iii) fraud, waste, and abuse in the state Medicaid program;
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(iv) the recovery of fraudulent or improper use of state and federal Medicaid funds;
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(v) measures taken by the state to discover and reduce fraud, waste, and abuse in the
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state Medicaid program;
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(vi) audits conducted by the office; [and]
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(vii) investigations conducted by the office and the results of those investigations; and
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(viii) administrative and educational efforts made by the office and the division to
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improve compliance with Medicaid program policies and requirements;
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(b) recommendations on action that should be taken by the Legislature or the governor
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to:
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(i) improve the discovery and reduction of fraud, waste, and abuse in the state
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Medicaid program;
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(ii) improve the recovery of fraudulently or improperly used Medicaid funds; and
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(iii) reduce costs and avoid or minimize increased costs in the state Medicaid program;
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(c) recommendations relating to rules, policies, or procedures of a state or local
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government entity; and

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(d) services provided by the state Medicaid program that exceed industry standards.
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(3) The report described in Subsection (1) may not include any information that would
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interfere with or jeopardize an ongoing criminal investigation or other investigation.
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(4) The inspector general shall provide the report described in Subsection (1) to the
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Executive Appropriations Committee of the Legislature and to the governor on or before
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October 1 of each year.
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(5) The inspector general shall present the report described in Subsection (1) to the
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Executive Appropriations Committee of the Legislature before November 30 of each year.
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Section 8.
Section
63J-4a-602
is amended to read:
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63J-4a-602. Rulemaking authority.
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The office may make rules, pursuant to Title 63G, Chapter 3, Utah Administrative
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Rulemaking Act, and Section
63J-4a-305
, that establish policies, procedures, and practices, in
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accordance with the provisions of this chapter, relating to:
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(1) inspecting and monitoring the state Medicaid Program;
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(2) discovering and investigating potential fraud, waste, or abuse in the State Medicaid
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program;
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(3) developing and implementing the principles and standards described in Subsection
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63J-4a-202
(1)[(p)](o);
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(4) auditing, inspecting, and evaluating the functioning of the division under
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Subsection
63J-4a-202
(1)(h);
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(5) conducting an audit under Subsection
63J-4a-202
(1)(h) or (2); or
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(6) ordering a hold on the payment of a claim for reimbursement under Section
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63J-4a-205
.